EMI, the British music giant behind Coldplay, The Beatles and Katy Perry is to
be broken up after Vivendi’s Universal Music Group struck a £1.2bn deal for
its recorded music arm at the 11th hour.

Separately, a Sony-led consortium has sealed a $2.2bn (£1.4bn) deal for EMI’s music publishing division, trumping BMG which was the front-runner as late as last week. Citigroup, the US bank which acquired the heavily indebted EMI in February from Guy Hands’s Terra Firma, will recoup around $4.1bn from the two sales – far more than had been expected.

Universal was one of the early contenders to buy EMI from Citigroup, but dropped out of the running last month after failing to agree terms over its pensions liabilities, leaving Warner Music in pole position to seal a deal. Warner hit

a similar sticking point, and Universal returned to the table this week. The French-owned group is understood to have reached an agreement after Citigroup agreed to assume EMI’s pension liabilities itself.

Some of EMI’s biggest selling artists were quick to welcome the Universal deal. Coldplay’s manager, Dave Holmes, hailed the company’s team of executives as “the most talented in the industry today”.

Sir Mick Jagger, frontman for the Rolling Stones who famously left EMI for Universal in 2008, said EMI would “once again be owned by people who have music in their blood”.

The deal will widen the gap between Universal and its rivals. It also marks a coup for Lucian Grainge, who was promoted to chief executive in January and became chairman in March.

He said: “For me, as an Englishman, EMI was the pre-eminent music company that I grew up with. Universal is committed to both preserving EMI’s cultural heritage and artistic diversity and also investing in its artists and people to grow the company’s assets for the future.”

Jean-Bernard Lévy, chief executive of Vivendi, promised “the Vivendi family” would act as a “safe, long-term home, headquartered in Europe”. He added that EMI would boost Vivendi’s earnings as early as “year one”, and it expected to save £100m a year in synergies.